Deploying a nationwide Mobile WiMAX network has proved to be a difficult task, and Sprint is now founding a new wireless company along with a range of industry leaders.
Sprint and Clearwire today announced that they have entered into a definitive agreement to combine their next-generation wireless broadband businesses to form a new wireless communications company called Clearwire. The new Clearwire will build on the existing subscriber base of nearly 400,000 wireless broadband customers as of year-end 2007, as well as Sprint's continued XOHM WiMAX network build-out in certain markets throughout this year.
Five technology, content and communications companies - Intel, Google, Comcast, Time Warner Cable and Bright House Networks - have collectively agreed to invest $3.2 billion into the new company. The investment by the five strategic investors will be based on a target price of $20.00 per share of Clearwire's common stock, subject to a post-closing adjustment. Sprint will own the largest stake in the new company with 51%, existing Clearwire shareholders will own 27%, and the strategic investors as a group will own 22% of the shares.
Intel will work with manufacturers to embed WiMAX chips into Intel Centrino 2 processor technology-based laptops and other Intel-based mobile Internet devices, and will market the new company's service in association with Intel's performance notebook PC brand.
Google will partner with the new Clearwire in the development of Internet services, advertising services and applications for mobile WiMAX devices. In addition, Google will be the search provider and a preferred provider of other applications for the new Clearwire's retail product. Google's CEO, Eric Schmidt, believes that its planned WiMAX network will increase the ability for users to get high-speed broadband anytime, anywhere.
Sprint, Comcast, Time Warner Cable, and Bright House Networks will enter into wholesale agreements with the new Clearwire, becoming 4G providers of new Clearwire's mobile WiMAX service.
Comcast, Time Warner Cable, and Bright House Networks and, after completion of the transactions, the new Clearwire, will enter into 3G wholesale agreements with Sprint, becoming bundled providers of Sprint's wireless voice and data services, expanding the reach of Sprint's network to more customers.
Sprint and Google have also entered into an agreement related to Sprint's mobile services, whereby Google will become the default provider of web and local search services, both of which will be enabled with location information, for Sprint. Sprint will also preload several Google services - including Google Maps for mobile, Gmail and YouTube - on select mobile phones and provide easier access to other Google services.
Google and Intel have options to enter into 3G and 4G wholesale agreements with Clearwire and Sprint respectively and have no current plans to do so.
The new Clearwire will apply for listing of its common stock on the NASDAQ under the ticker "CLWR". The management team will be led by Benjamin G. Wolff, currently CEO of Clearwire, as the new company's CEO and Barry West, currently Sprint's Chief Technology Officer and XOHM business unit leader, as president of the new Clearwire. Staffing for the new Clearwire will include employees from both Clearwire and Sprint's XOHM business unit. The headquarters of the new Clearwire will be located in Kirkland, Wash. The new company will continue to have a significant employee presence, including research and development, in Herndon, Va.
Mobile WiMAX is a standard-based wireless broadband technology designed to operate multiple times faster than today's 3G UMTS and EV-DO wireless networks. With embedded WiMAX chipsets in laptops, phones, PDAs, mobile Internet devices and consumer electronic equipment, mobile WiMAX is expected to allow users to wirelessly access a range of multimedia applications, such as live videoconferencing, recorded video, games, large data files and more - anywhere in the network coverage area.
The new Clearwire didn't say anything about when the deployment of the nationwide mobile WiMAX network should be completed, but it could easily take a couple of years from now.
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